INDIANAPOLIS (Jan. 24, 2006)—New reinsurance regulations proposed by the California Department of Insurance (CDI) are “unnecessary, burdensome and anti-market competition,” according to comments filed by three primary insurance trade associations for CDI hearings in Los Angeles today.
"In light of the new financial responsibilities imposed on insurance carriers as a result of the Terrorism Risk Insurance Extension Act of 2005 (TRIA) and the widespread natural disaster claims that the insurance industry has had to deal with this past year, it is imprudent to impose new regulations that could limit an insurance carrier’s reinsurance options," argued Christian John Rataj, National Association of Mutual Insurance Companies (NAMIC) state affairs manager for the western United States.
NAMIC and its domestic member state advocacy partner, the Pacific Association of Domestic Insurance Companies (PADIC) argued that the proposed regulations are problematic for the following reasons:
"Historically, regulations are created and adopted to resolve a particular problem within the insurance industry or to deal with a potential problem. Yet there does not appear to be any evidence that insurance company insolvencies are on the increase, or at least to the extent that would warrant the adoption of these regulations," stated PADIC's Executive Director, Milo Pearson.
"The CDI's reinsurance regulations would impose significant administrative and accounting procedures on reinsurance companies,” stated William Boyd, NAMIC financial regulation manager. “These restrictions exceed without justification the National Association of Insurance Commissioners' (NAIC) Credit For Reinsurance Model Law and the related Credit For Reinsurance Model Regulation, which set forth a comprehensive plan for regulating reinsurance."
Rataj also asserted that "the professional relationship between the insurance industry and reinsurance industry must be vibrant with competition in order to afford consumers the insurance protection they need to address these ever growing insurance realities."
"Any regulation that does not demonstrate that it is necessary, appropriate and beneficial to the insurance consumer should be opposed as being an unreasonable impediment to market competition in the reinsurance industry," claimed Rataj.
"NAMIC will continue to work with its state advocacy partners, PADIC and PIFC, and the rest of the insurance industry in protecting insurance consumers from having to pay the price of needless insurance regulations," stated Rataj.
For further information, contact
Rick Nelson, APR
(317) 875-5250 Tel
(317) 879-8408 Fax
Posted: Tuesday, January 24, 2006 12:00:00 AM. Modified: Tuesday, January 24, 2006 4:00:54 PM.
317.875.5250 - Indianapolis | 202.628.1558 - Washington, D.C.